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TMI Blog2020 (9) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... ata dated 14.01.2019 for A Y 2006-07 confirming the penalty levied u/s. 271(1) ( c) read with section 274 of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. None appeared for the assessee. However, we have gone through the grounds of appeal raised by the assessee and note that the Ld. CIT(A) has passed an ex parte order without adjudicating the grounds of appeal preferred by the assessee. The grounds of appeal of assessee reads as under: 1. For that Ld. CIT(A) was wrong in dismissing the appeal ignoring (a) fact that appellant had opted for e-proceedings (b) submitted written submissions and judgments relied on through e-Proceedings In my account on departmental website and also by way of emails on official email id of Ld. CIT(A), (c) Ld. CIT(A) has himself considered the appeal through eproceedings and had uploaded order on portal and did not serve hard copy of order and (d) the notice of Ld. CIT(A) clearly mentioned to the effect that personal appearance is not necessary and appellant can file written submission by email etc. 2. For that Ld. CIT(A) was wrong in holding that appellant had not made representations and has not filed written submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 271(1) (c) of the Act is defective/invalid in the eyes of law and consequent levy of penalty was bad in law as held by the Hon ble Karnataka High Court and SLP preferred by the Revenue against this decision of High Court has been dismissed by the Hon ble Supreme Court, which will be discussed detail infra. Since the assessee has challenged the impugned action of penalty levied by the AO and confirmed by CIT(A) and as discussed [supra] we have taken note of the invalid notice issued by AO before imposing penalty, which is a legal issue, we are inclined to adjudicate this appeal of assessee by considering this legal issue which is no longer res-integra. 3. As discussed above, a reading of the penalty notice, we note that the AO has not stricken out the irrelevant portion of the fault/charge which would have spelt out the specific fault/charge against the assessee as per section 271(1) (c) of the Act. Since the proposed notice itself is defective, all subsequent proceedings are bad in law and the penalty imposed by the AO u/s. 271(1)(c) of the Act and confirmed by the Ld. CIT(A) should be cancelled. For coming to such a conclusion we rely on the decision of the Hon ble Karna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the context of specific charge in the mandatory show cause notice u/s.274 of the Act. Therefore reference to this decision, in our view is not of any help to the plea of the Revenue before us. 8. The learned DR relied on three decisions of Mumbai ITAT viz., (i) Dhanraj Mills Pvt. Ltd. Vs. ACIT ITA No.3830 3833/Mum/2009 dated 21.3.2017; (ii) Earthmoving Equipment Service Corporation Vs. DCIT 22(2), Mumbai, (2017) 84 taxmann.com 51 (iii) Mahesh M.Gandhi Vs. ACIT Vs. ACIT ITA No.2976/Mum/2016 dated 27.2.2017. Reliance was placed on two decisions of the Hon ble Bombay High Court viz., (i) CIT Vs. Kaushalya 216 ITR 660(Bom) and (ii) M/S.Maharaj Garage Co. Vs. CIT dated 22.8.2017. This decision was referred to in the written note given by the learned DR. This is an unreported decision and a copy of the same was not furnished. However a gist of the ratio laid down in the decision has been given in the written note filed before us. 9. In the case of CIT Vs. Kaushalya (supra), the Hon ble Bombay High Court held that section 274 or any other provision in the Act or the Rules, does not either mandate the giving of notice or its issuance in a particular form. Penalty proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a used by the Assessing Authority. Before issuing the notice the inappropriate words and paragraphs were neither struck off nor deleted. The Assessing Authority was not sure as to whether she had proceeded on the basis that the assessee had either concealed its income or has furnished inaccurate details. The notice is not in compliance with the requirement of the particular section and therefore it is a vague notice, which is attributable to a patent non application of mind on the part of the Assessing authority. Further, it held that the Assessing Officer had made additions under Section 69 of the Act being undisclosed investment. In the appeal, the said finding was set-aside. But addition was sustained on a new ground, that is under valuation of closing stock. Since the Assessing Authority had initiated penalty proceedings based on the additions made under Section 69 of the Act, which was struck down by the Appellate Authority, the initiated penal proceedings, no longer exists. If the Appellate Authority had initiated penal proceedings on the basis of the addition sustained under a new ground it has a legal sanctum. This was not so in this case and therefore, on both the grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n otherwise this decision does not follow the ratio laid down by the Hon ble Karnataka High Court in the case of Manjunatha Cotton Ginning (supra) in as much as the ratio laid down in the said case was only with reference to show cause notice u/s.274 of the Act. The Hon ble Court did not lay down a proposition that the defect in the show cause notice will stand cured if the intention of the charge u/s.271(1) (c ) is discernible from a reading of the Assessment order in which the penalty was initiated. 14. From the aforesaid discussion it can be seen that the line of reasoning of the Hon ble Bombay High Court and the Hon ble Patna High Court is that issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The Tribunal Benches at Mumbai and Patna being subordinate to the Hon ble Bombay High Court and Patna High Court are bound to follow the aforesaid view. The Tribunal Benches at Bangalore have to follow the decision of the Hon ble Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X
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